BAGGAGE AND BLINDERS: THE DYNAMIC NATURE OF EARLY STAGE INVESTOR DECISION MAKING

Early stage investors provide an essential resource to entrepreneurs in order to develop, launch, and maintain their venture: financial capital. However, oftentimes these investors provide additional resources that are not financial in nature, such as access to important social networks, reducing barriers to enter certain industries, and mentoring and providing advice to ensure an entrepreneur’s venture is successful. Much of the literature on early-stage investments has focused on the influence of an entrepreneur’s background or behaviors during a pitch on the investor’s decision to fund. While helping us understand aspects that can play a role in investor decisions, most of our knowledge is disjointed, static, and cross-sectional, preventing us from understanding 1) the relative importance of different factors that can influence decisions to fund a venture and 2) how decisions are made aside from the ultimate funding decision, and how they change over time. This dissertation attempts to discern how both the signals sent by entrepreneurs, as well as the investor’s own motivations, goals, and relationships play important and varying roles in their decisions to engage and invest. To do this, I take a meta-analytic approach to synthesize the extant literature, as well as develop a dynamic model of investor decision-making processes via an inductive qualitative study. Implications for current and future research are discussed.